Correlation Between Microsoft and GSW Immobilien

Can any of the company-specific risk be diversified away by investing in both Microsoft and GSW Immobilien at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Microsoft and GSW Immobilien into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Microsoft and GSW Immobilien AG, you can compare the effects of market volatilities on Microsoft and GSW Immobilien and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Microsoft with a short position of GSW Immobilien. Check out your portfolio center. Please also check ongoing floating volatility patterns of Microsoft and GSW Immobilien.

Diversification Opportunities for Microsoft and GSW Immobilien

-0.49

Correlation Coefficient

Microsoft  GSW Immobilien

Very good diversification

The 3 months correlation between Microsoft and GSW is -0.49. Overlapping area represents the amount of risk that can be diversified away by holding Microsoft and GSW Immobilien AG in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on GSW Immobilien AG and Microsoft is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Microsoft are associated (or correlated) with GSW Immobilien. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of GSW Immobilien AG has no effect on the direction of Microsoft i.e., Microsoft and GSW Immobilien go up and down completely randomly.

Pair Corralation between Microsoft and GSW Immobilien

Assuming the 90 days trading horizon Microsoft is expected to generate 0.84 times more return on investment than GSW Immobilien. However, Microsoft is 1.2 times less risky than GSW Immobilien. It trades about 0.1 of its potential returns per unit of risk. GSW Immobilien AG is currently generating about -0.01 per unit of risk. If you would invest  35,475  in Microsoft on March 19, 2025 and sell it today you would earn a total of  5,975  from holding Microsoft or generate 16.84% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Microsoft  vs.  GSW Immobilien AG

Microsoft

Risk-Adjusted Performance

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Microsoft are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain technical and fundamental indicators, Microsoft unveiled solid returns over the last few months and may actually be approaching a breakup point.

GSW Immobilien AG

Risk-Adjusted Performance

Very Weak

Over the last 90 days GSW Immobilien AG has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of very healthy fundamental drivers, GSW Immobilien is not utilizing all of its potentials. The newest stock price disarray, may contribute to short-term losses for the investors.

Pair Trading with Microsoft and GSW Immobilien

The main advantage of trading using opposite Microsoft and GSW Immobilien positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Microsoft position performs unexpectedly, GSW Immobilien can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in GSW Immobilien will offset losses from the drop in GSW Immobilien's long position.

The idea behind Microsoft and GSW Immobilien AG pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Positions Ratings module to determine portfolio positions ratings based on digital equity recommendations. Macroaxis instant position ratings are based on combination of fundamental analysis and risk-adjusted market performance.